Livia: Company Incentive

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As I was reading Anderson’s portrayal of the American workplace, I asked kept asking myself: Is there an incentive for American firms to establish better working conditions that promote republican freedom for their workers?

Within chapter 6 response to Anderson, economist Tyler Cowen takes up this question. First, he criticizes Anderson’s overly negative portrayal of corporate impositions on worker dignity. Second, he makes the claim that many companies do go out of their way to protect and promote the freedom of their workers largely because it is in their best interest to do so. Through respecting the autonomy and dignity of their workers, firms are able “to attract and keep talent”, which should in turn drive growth for their company (114). Cowen’s analysis helps us to understand two critical points. First, that there are incentives for bosses within firms to promote and secure the well being of their employees. Second, that the incentive for companies establishing better working conditions goes beyond a moral obligation, and can be monetarily driven. Personally, I find this second point crucial, for the only way in which I believe management of corporations will change their current practices is if change is beneficial for shareholder value, company growth, and increasing their own personal salaries.

Of course, Anderson is right to point out that Cowen’s incentive argument is only honored “when workers are respected by their employers” and that the “amount of respect, standing, autonomy they get is roughly proportional to their market value” (138). Most low wage workers are not afforded the same respect that high skilled, experienced individuals that are scare within their work field possess. In fact, minority populations struggle to obtain work within the first place, and are classified as unemployed.

While I agree with Anderson that companies may not have the same level of interest to create better working conditions for low wage workers as they do for high wage workers, I still believe there is a monetary incentive argument to be made for low wage workers, especially post pandemic. Interestingly, after Covid-19, many business leaders have struggled to fill their lower-level positions that are integral to their operating models. Such unfilled positions have reduced outputs of companies, increased the wages that companies have needed to pay in overtime, created churn within businesses, and have decreased employee’s morale (Fuller and Raman). Much of the inability to fill these positions follow from the horrific conditions and low wages that employees are paid. Through increasing wages or improving working conditions, companies would be able to offset many of the significant costs they are incurring from an inability to fill their low-wage positions. Here, it is economically beneficial for companies to improve their working conditions to attract low wage workers and in turn improve the fiscal status of their company.

The example which I present above presents the inverse of high wage worker example that Cowen presents. In this case, companies would be driven to improve their working conditions to offset costs they are incurring, rather than to drive growth for their company. However, I think finding studies that analyze the positive economic benefits in driving productive, company profitability, etc. when companies improve working conditions for low-wage workers could have similar positive results in driving change.

Still, of course, we run into the problem of companies adjusting their practices because of the associated value which they assign to their employees. But as far as strategies that will promote change go, this seems like it could be quite effective.

Work Cited:

Fuller, Joseph, and Manjari Raman. “Building from the Bottom Up.” Building From the Bottom Up - Managing the Future of Work - Harvard Business School, https://www.hbs.edu/managing-the-future-of-work/research/Pages/building-from-the-bottom-up.aspx.

 

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